Are you or have you ever been a researcher in higher education?
UCU has launched a new survey to gather evidence on the impact of short-term funding on the production of research. If you are or have ever been a researcher, please help us by filling in this survey. The survey is open to all involved in research, so when you’ve completed it, make sure to pass it on to other researchers, along with this link to join UCU, the union fighting for better research careers.
UCU Congress prepares the ground for a fight to defend Post 16 Education
This year’s UCU congress prepared the ground to put the union at the forefront of the campaign to defend Post 16 Education. Despite the conference being cut short by a day, due to the RMT proposed strike, delegates passed a raft of motions that provided a frame to launch a real campaign to mobilise members in defence of Further, Adult and Higher Education involving demonstrations, lobbies, strikes and conferences.
Defending Post 16 Education
Despite the sobering fact of another five years of continuing Government attacks on both sectors there was a real determination at congress this year to mobilise members in the universities and colleges. A motion calling upon UCU to organise a national demonstration in defence of post 16 Education was passed unanimously. In the Further and Higher Education Sector conferences a motion was passed to support ‘Saving Lifelong learning’ and Defend the Public University conferences as part of this campaign.
Delegates were enthusiastic about building the lobby of Parliament on the 16th June to stop the 24% cut in the Adult Education budget. Sally Hunt, General Secretary, made clear the whole union was behind this campaign. She told congress that the union would fund coaches to take people to the lobby and urged branches to fill them. A motion was passed in support of the People’s Assembly demonstration on the 20th June and delegates encouraged branches to be a part of the UCU Save Lifelong Learning contingent on the demonstration.
Coordinating action to save every job and every student place
Across the country branches and associations are facing a wave of S188 redundancy notices. Delegates told Congress and sector conferences of plans to attempt to coordinate strike action. In London 12 FE Education branches and London Metropolitan University either have or are about to start balloting their members for strikes and the first day of coordination in the capital will be on 23rd June.
There is also a second day of nationally coordinated strike on the 30th June which could see branches from Wales and Yorkshire and Humberside Region join the day.
Both sector conferences voted to ballot members over this year’s pay claims if the employers fail to meet UCU’s demands. In Further Education a campaign to win £1 extra per hour was launched and a national ballot will take place as soon as possible on the 2015/16 claim. In HE delegates voted to recommend to reject a 1% pay offer and to ballot members for strike action to pursue their claim.
The anti-casualisation campaign had a high profile at conference and a number of important motions were passed calling on UCU to organise a joint lobby of Parliament. Congress supported a motion in support of the national demonstration at Warwick on June 19th against casualisation and Teach Higher.
Congress debated a motion that called upon UCU to organise a conference to start a discussion about political representation. A brief but interesting debate was had where the mover of the motion argued that what the general election showed was that all mainstream parties have lost the ability to address the concerns of working people. The mover continued to argue that the SNP’s landslide victory in Scotland, Syriza’s success in Greece and the rise of Podemos in Spain show that new political formations espousing a clear anti -austerity case are starting to develop. The motion was passed by a margin of 2:1.
Congress discussed a Boycott Divestment and Sanctions motion in solidarity with Palestine. The General Secretary read out legal advice stating that according to union solicitors, if the motion were passed it could not be implemented. The chair informed the Congress that the motion would be null and void. Despite this the motion was discussed and passed by an overwhelming majority placing UCU at the forefront of the campaign to support the Palestinian people. Motion on UCU and BDS campaign.
Congress passed a motion condemning the cancellation of the Southampton conference as an attack on academic freedom.
Immigration
Motions were passed overwhelmingly to ensure UCU has clear policy to challenge the anti-immigrant hysteria during the election. In particular to promote and use the excellent UCU/CLASS pamphlet, Why Immigration Benefits us all that exposes the myths and lies that surround immigration. The motion called upon UCU to produce a multiculturalism teaching resource pack.
One of the more contentious issues at Congress was about how to oppose the Government’s Prevent strategy. Motions called for a boycott of Prevent. Delegates spoke passionately in support of the motion arguing that they did not want to act as Government spies and lose the trust of their students. As one speaker put it, ‘Every time you hear the call to uphold British Values, you know it is a call for racism and xenophobia’. The General Secretary gave legal advice from UCU lawyers, of the difficulty and complexity of organising a dispute on the issue. However, it was agreed following overwhelming support for the position that the Recruitment Organising and Campaigns Committee would oversee a way to implement the demands of the motion.
Delegates brought motions to Congress expressing the frustration and anger of black members at the widespread institutional racism they face in the sector. Motions were passed calling on the union to train and develop more BME reps and ensure proper representation at all levels within the union.
The announcement, by the chair of UCU’s equality committee, that the Irish people had voted in their referendum to make legal gay and lesbian marriage sent a wave of excitement and joy around the congress room.
Victimisations
There were many motions brought to conference and passed unanimously in defence of union activists who have been victimised as a result of resisting cuts. Congress heard of a growing list of victimisations including the sacking of union reps; the Markey’s at Bolton University, at Salford University; the sacking of Michael Starrs from the College of North West London and the victimisation of Sean Vernell at City and Islington. Congress delegates argued that we need a rapid response to these victimisations and the union must throw all its weight behind all anti-victimisation campaigns to ensure that branches provide maximum practical solidarity.
Motions were passed that challenged ‘austerity of the mind’ and how UCU can respond to the ideological attacks on the curriculum, such as a symposium to bring together English and Maths teachers to discuss the curriculum.
There were many important debates on issues of equality, especially Disabled members and performance management issues. TUOS were congratulated on the webpages on Disability leave policy.
Debates on the REF, lesson observations, workloads, Prison, ACE and many more. Click here to see all motions that were passed at Congress and Sector conferences.
Some key motions passed on support for Academic related/professional service staff and recognising their role within UCU. This was a key issue if the union is to remain inclusive and represent all members. UCU is also raising its game on the professional development front, its course are attracting a great deal of interest, especially from under- represented groups such as our black members.
Key dates and events post Congress
June 3rd Defend Post 16 education rally at Hackney College, London.
June 16th Lobby of Parliament to defend adult education. Contact UCU to book coaches now.
June 19th National demonstration against TeachHigher and casualisation. Warwick.
June 20th National People’s Assembly demonstration to ‘End Austerity’. London.
June 23rd / 30th coordinated action to defend jobs threatened as a result of the 25% cut to adult education.
Jane Simm and Sam Moorcroft, SUCU committee
With acknowledgement to UCU left for permission to adapt this report
We have now heard that the Rotherham Advertiser has withdrawn the threat of redundancy against long-serving union rep Phil Turner. The move comes after an appeal hearing against the redundancy decision which was held on Tuesday. National Union of Journalists members at the weekly title have voted to hold a 24-hour strike today in protest against the proposed sacking which has now been called off. Read more….
The National Union of Journalists (NUJ) chapel (branch) at the Rotherham Advertiser have agreed to take strike action on Thursday 11 June. The 24-hour walkout is in response to the decision by the new chief executive, Nick Alexander, to target the NUJ’s Father of Chapel (FoC, shop steward) for compulsory redundancy. FoC Phil Turner has worked for the company for more than 30 years and is a long-serving trade union representative. Phil is the only person who has been dismissed among editorial staff and was told on Wednesday 27 May. The union is appealing this decision and demanding the company withdraw the threat of redundancy immediately.
Protection from bullying management is fundamental to journalistic freedom.
Chris Morley, NUJ Northern and Midlands organiser, said: “There is still time for the company to think again and I hope very much they do so that a sensible outcome can be arrived at. The NUJ is ready and willing to talk but it cannot be with this dismissal notice hanging over the FoC’s head.”
If you are a member of the USS pension scheme and have not yet responded to the consultation, please try do so before it closes on Friday. The more responses received the greater the chance of moving the proposal. The Sheffield UCU responses to the questions are below. Feel free to copy and paste them if you want to (including the <br/>s which give paragraph breaks).
Respond to the consultation: http://www.ussconsultation.co.uk
(you will need your NI number and USS member number from a USS statement)
Our full response to the consultation in conjunction with the other campus trade unions (Unite and UNISON) can be read at the following link: union_response_uss_consultation
*****************
Question 1: Do you have any comments on the proposed change to end the link to final salary?
*****************
Breaking the link to final salary for past service is indefensible. On USS’s own calculations, this amounts to a reduction of £4.8bn in the pensions workers will receive in exchange for contributions they have already made (and will continue to make for the next twelve months) into the final salary scheme. Severing this link flies in the face of the assurances to USS members in 2011 that the changes introduced then – including a substantial increase in employee contributions – were, in the words of the Employers Pension Forum, “designed to ensure that the scheme will be both sustainable and affordable over the long term”. The Hutton Report on reforms to public sector pensions called for the preservation of the final salary link for past service in the transition to CRB. It deemed this necessary in order to maintain the “trust and confidence” of employees in their pension scheme. Thus there are compelling reasons to maintain the final salary link for past service.<br/><br/>
I have major problems with the way the fund has been valued, in particular<br/><br/>
– the calculation of the discount rate, which, as far as we can tell, has been downgraded from the rate used in 2011 due only to a fall in gilt yields and in spite of strong performance in the intervening years;<br/>
– the pay growth predictions, which are at an unrealistically high level that we believe the sector has no intention of matching and likely to vastly over-estimate liabilities;<br/>
– the `reliance on covenant’ measure, sometimes referred to as Test 1, which we believe to be misleadingly named, inappropriate and damaging to the scheme;<br/>
– the contradictory nature of the assumptions, in that while pay growth points to a buoyant economy and healthy higher education sector, the uprating by CPI in Test 1 suggests a stagnant sector and the discount rate points to falling dividend yields (i.e. a recessionary economy).<br/><br/>
The case USS and our employers make for breaking the final salary link is unconvincing: that this is needed to offset a rise in their assumed deficit on past service. The main source of this increase is the nearly £7.6bn that the fall in gilt yields has added to their assumed deficit. This huge increase, however, is an artefact of USS’s widely discredited `gilts plus’ method of setting the discount rate. It is lamentable that USS and our employers rest their case for such a large reduction in benefits on an unjustified and unjustifiable valuation methodology. Neither the USS trustee nor the Employers Pension Forum has offered any detailed, let alone convincing, response to the critiques of the methodology from various sources, including First Actuarial, the statisticians who wrote to the trustee in the autumn, and various employers such as Imperial, Warwick, and the LSE. Most tellingly, they have failed to respond to the following point made by the statisticians:<br/><br/>
“By their nature, the scheme’s real liabilities must vary slowly on a decadal timescale. Liability estimates that show rapid variation on a scale of months to years (as they do for USS) are an indication of instability in those model-derived estimates, not the underlying reality. We would urge you to change to a more stable methodology, rather than allowing the actuarial assumptions tail to wag the investment strategy dog, by `de-risking’ into Gilts and substantially reducing members benefits. The wild swings in actuarial valuations we are now seeing are either the classic symptoms of a controlled system with (highly undesirable) positive feedback or the `chattering’ you get with a controlled system where the control needs to be smoothed over time.”<br/><br/>
Before it severs the final salary link for past service, USS must offer, for public scrutiny and debate, a detailed and compelling response to the critiques of the valuation methodology. It must do so in order to establish the trust and confidence of scheme members that a £4.8bn cut in pensions is in fact necessary.
*****************
Question 2: Do you have any comments in relation to the proposed treatment of transfers in for final salary section members?
*****************
The proposal to withdraw from the public sector transfer club may create recruitment issues. There may be also be a disincentive to apply for promotion if success would mean placement in an inferior USS scheme without the ability to transfer service from other schemes.
****************
Question 3: Do you have any comments in relation to the proposed treatment of Money Purchase and/or Added Years Additional Voluntary Contributions (AVCs) for final salary section members?
****************
I do not agree that USS should be able to cancel the contract members signed to purchase additional years’ service in the final salary section, effective from 31st March 2016.<br/><br/>
All of the literature about the AVCs purchased indicated that the additional years would be added to earned service and that it would be linked to future final average salary. USS should honour the original commitment and enable members to continue to purchase additional years’ service in line with the original contract.<br/><br/>
It is not a reasonable alternative to offer members the ability to take out a new contract in an inferior (CRB) section of the scheme.<br/><br/>
I note that USS considers that it can modify the benefits members will earn based on future service in the scheme, but I do not accept that it can alter the added years’ AVC. USS should honour all AVC service, in line with the original terms.<br/><br/>
I understand that up to 31 March 2016 the fund enables members to purchase service in the final salary section of USS. I would expect the money-purchase fund value at 31 March 2016 to be clearly identified and increases accrued to that part of the money purchase fund should be used when calculating the additional service purchased in the final salary section.
****************
Question 4: Do you have any comments in relation to the proposed treatment of transfers in for current and prospective CRB section members?
****************
I am concerned that there may be issues in relation to transfer from USS and non-USS institutions within the UK HE sector.
****************
Question 5: Do you have any comments in relation to the proposed treatment of Money Purchase and/or Revalued Benefits Additional Voluntary Contributions (AVCs) for current and prospective CRB section members?
****************
I want all contracts to be fully honoured. The closure of this facility reduces USS’s attractiveness to potential members.<br/><br/>
I understand that up to 31 March 2016 the fund enables members to purchase service in the CRB section of USS. I would expect the money-purchase fund value at 31 March 2016 to be clearly identified and increases accrued to that part of the money purchase fund should be used when calculating the additional service purchased in the CRB section.
****************
Question 6: Do you have any comments on the proposed new career revalued benefits section of the scheme?
****************
Although the proposal is to improve the CRB section by improving the accrual rate, I am concerned that USS is failing to match the benefits available from the Teachers’ Pension Scheme, the other major pension scheme in the higher education sector for similar posts. USS should be planning to improve both the accrual rate and revaluation rate in the CRB section in the future.<br/><br/>
The revaluation should be in line with uncapped CPI for active members.
****************
Question 7: Do you have any comments on the proposed level of the salary threshold or the proposed approach to the revaluation of the salary threshold?
****************
I do not accept that there should be a threshold; defined benefits should be based on members’ full salary. However, as a minimum, the salary threshold should be linked to the top of the nationally agreed pay spine. This requires urgent review.
****************
Question 8: Do you have any comments on the proposed application of the salary threshold for part-time employees?
****************
There should be equal treatment in the scheme for part-time and full-time staff. As such, actual earnings should be used to determine the level of contributions payable, rather than full-time equivalent salary.
****************
Question 9: Do you have any comments about the proposed creation of a defined contribution section for employer and member contributions on salary above the salary threshold (£55,000 as at the implementation date)?
****************
This move from DB to DC is bad value for money.<br/><br/>
According to a recent Canadian Public Pension Leadership Council study on `Shifting Public Sector DB Plans to DC’: “It is widely recognized within the pension industry that DC pension plans are less efficient generators of pension income than are DB arrangements or other pension design alternatives.”<br/><br/>
Through the modelling of these inefficiencies, the study indicates that “for an efficient \$10bn DB plan, converting to individual account DC arrangements to provide the same value of pension benefit would increase the ongoing cost of the plan by about 77 percent and increase the required contribution rates accordingly. The portion of the final benefit coming from investment returns would drop from 75 percent to 45 percent.”<br/><br/>
In addition to its modelling, the Canadian study draws on “experience and evidence from other jurisdictions” in reaching the conclusion that “Large, well-run DB plans are more efficient at producing retirement income than are DC plans. Several US states that have looked at converting DB plans to DC have concluded that it would cost considerably more to maintain similar benefits. Two states that had converted to DC at least partially converted back because of concerns over how little income they were producing for retirees (Nebraska and West Virginia).”<br/><br/>
The USS consultation modeller itself reveals an unfavourable comparison between the new CRB defined benefit (DB) pension that a \textsterling55,000 salary will generate with the equivalent annuity that one could purchase if one earns \textsterling 55,000 in the new defined contribution (DC) section. What such a comparison reveals is that one needs to keep one’s DC pension pot invested for a long time, and at a fairly high rate of return, in order to generate enough wealth to purchase an annuity that matches or exceeds the CRB DB pension. Even at the USS consultation modeller’s highest rate of return of 7.5\%, one needs to keep one’s DC pension pot invested for over 30 years in order to purchase a matching annuity. See this spreadsheet for more details: http://tinyurl.com/p4zdz7p <br/><br/>
Academics in USS won’t, however, start putting much money into their DC pension pots until they’re earning higher salaries later in their careers. Perversely, members will end up making more and more DC contributions when they will yield less and less of a pension per pound contributed. This flaw in the system will be magnified if the default DC fund involves the common practice of `lifestyle’ de-risking of one’s pension pot into lower-risk, lower-return assets as one nears retirement.<br/><br/>
This problem would be mitigated somewhat if USS members are allowed to keep their DC pension pots invested in USS funds throughout their retirement. Under this scenario, pension income would be generated via a gradual drawing down of their pot in retirement, rather than via an exchange of their entire pot for an annuity at the beginning of their retirement.<br/><br/>
A move to collective DC would provide further mitigation. Under CDC, USS could make use of investment and longevity risk pooling, plus a continual and long-term investment of the collective fund in return-seeking assets, in order to try to achieve the target of a pension that is equivalent to the CRB DB pension. See the response to question 10 for further comments on CDC.
****************
Question 10: Ahead of any further engagement by the trustee about the defined contribution section, do you have any comments on the range of funds to be provided (including the default fund), the charges payable by members, or any other aspects of the defined contribution proposition?
****************
USS has not yet provided details of the default DC option they will provide for members, free of management and investment charges. If, however, their default option takes the most common form, it will involve `lifestyle’ or `life-cycle’ de-risking, where investments are shifted from equities into less volatile assets such as bonds as a member nears retirement.<br/><br/>
Such de-risking comes at a significant cost. In `The Value and Risk of Defined Contribution Pension Schemes: International Evidence’, Edward Cannon and Ian Tonks found that the median lifestyle or life-cycle de-risked pension pot across sixteen different OECD countries was only 73.4% as large at retirement as the median pot that had been invested in equities throughout. For the UK in particular, the median de-risked pension pot was only 59.5% as large as the median pot that remained invested in equities throughout. Moreover, from 1948 to 2007, lifestyle de-risking would have made a UK pensioner more than marginally better off only during the years immediately following the burst of the dotcom bubble in 2000. In almost all other years, even those preceded by fairly sharp downturns in the stock market, such de-risking would have left members poorer in retirement than a high wire strategy of remaining invested purely in equities throughout one’s career. Cannon and Tonks also show that investing purely in bonds, or else 50% in equities and 50% in bonds, yields worse results than lifestyle de-risking. All of these investment strategies involve a flattening of the market volatility of equities only at the cost of a substantial amount of levelling down into lower-return assets.<br/><br/>
The Employers Pension Forum maintains that USS’s default DC option will be “designed to be the most appropriate investment choice for the scheme membership”. We can see now, however, that there is no appropriate investment choice for an individual with a DC pension pot. USS members will be forced to navigate the Scylla of highly volatile equities and the Charybdis of levelling down.<br/><br/>
If we are to tame volatility in return-seeking equities without levelling down, we must instead turn to a form of DC known as `collective benefits’ defined contribution (CDC), which allows for the efficient pooling of investment and longevity risks among employees. The reaping of economies of scale and investment expertise during retirement is a further advantage of CDC over individual DC pots. CDC would enable employers to provide better pensions in comparison with individual DC without contributing a penny more in contributions. Moreover, CDC would neither create any obligation to increase employer contributions in the future nor add any debt to their balance sheets, since the benefits to employees do not constitute a promise.<br/><br/>
CDC should be the default DC option. Please see this note for further remarks regarding the inadequacies of lifestyle de-risking and in defence of CDC: http://tinyurl.com/phgfk4d <br/><br/>
If, however, members opt for individual DC pots over CDC, USS should make passively managed index funds available with management costs no higher than that which is strictly necessary to cover actual costs. Whatever shape the DC section takes, all costs, management fees, and investment fees must be explicitly stated.
****************
Question 11: Do you have any comments on the options the trustee should make available for members as to how they might use their defined contribution account at retirement or upon leaving the scheme?
****************
According to the Canadian study mentioned above, “much of the investment returns that drive DB pension plans come from returns made during the individual’s period of retirement.” Under the DB portion of our hybrid pensions, for example, the USS investment team will be on call to invest our collective USS pension fund expertly and optimally throughout the period of our retirement, so as to generate enough income to cover the pensions they’ve promised. In a typical DC pension pot scheme, by contrast, “at retirement the amount accumulated in an individual’s account is turned over to the individual, and the benefits of low-cost professional management are lost for the subsequent period of individual’s retirement. By one estimate, 60 cents of every dollar of retirement income is earned after retirement.” The benefits that are lost include both the lower administrative costs of economies of scale that come with the management of large funds and the investment expertise of the fund managers. Individuals will also need to contend with longevity risk in trying to figure out what they should do with their pension pots once they retire. These considerations are all the more relevant given the new freedoms over drawdown of pension accumulations.<br/><br/>
It is therefore important that USS provide individuals with the opportunity to keep their DC pension contributions invested in USS pension funds throughout their retirement. Collective Defined Contribution (CDC) provides this.
The proposal on which UCU members were balloted in January included “an agreement to continue a review of the contested funding methodology adopted by USS” and “an agreement with the employers that any improvement in the USS funding position should be used to improve benefits rather than be used by USS for further de-risking”.<br/><br/>
In their 2 December submission to the USS AV Consultation, UUK stated that “compelling arguments have been put forward for assuming de-risking occurs in 20 years’ time, rather than by assuming arbitrarily that de-risking is carried out on a linear basis over a 20 year period”. UUK also called for “breathing space for the [de-risking] strategy to be reviewed at the next triennial valuation due at 31 March 2017 (rather than de-risking being rushed through)”. UUK wrote to “urge the trustee to accept” a delay in the start of de-risking for 10 years, as “a compromise between the trustee proposal and an alternative approach of `bullet’ de-risking in 20 years’ time”. It appears, however, from p. 11 of their consultation document, that the trustee intends to stick to linear de-risking over 20 years.<br/><br/>
Such a refusal to accept UUK’s compromise is contrary to the spirit of the two agreements mentioned in the balloted proposal. If there is to be a genuinely open review of the contested funding methodology, irreversible steps should not now be taken which presuppose a given outcome to that review. The immediate commencement of de-risking would be an irreversible step, since it would, in USS’s own words on p. 11 of the consultation document, “produce lower returns and therefore increase overall pension costs”. Resources to fund an eventual improvement in pension benefits will be permanently lost if de-risking begins now.<br/><br/>
Please see the following note for a defence of First Actuarial’s approach to the valuation, which implies the unsoundness of a strategy of de-risking: http://tinyurl.com/q2palz8
